Sustaining the recovery will require both monetary and fiscal support as well as accelerated structural reforms

China’s economy is set to rebound this year as mobility and activity pick up after the lifting of pandemic restrictions, providing a boost to the global economy.

The economy will expand 5.2 percent this year, according to our latest projections, versus 3 percent last year. That’s good news for China and the world as the Chinese economy is now expected to contribute a third of global growth this year.

Even so, China still faces significant economic challenges. The contraction in real estate remains a major headwind, and there is still some uncertainty around the evolution of the virus. Longer-term, headwinds to growth include a shrinking population and slowing productivity growth. 

Accordingly, as we note in our annual report for China, the economy needs comprehensive macroeconomic policies and structural reforms to secure the recovery and promote balanced, green, and inclusive growth. 

We recommend keeping fiscal policy neutral this year, with additional monetary policy accommodation helping secure the recovery amid muted inflation pressures and growth below its potential. Orderly restructuring of troubled property developers will also help reduce risks.

For more details, please click on the original link here.